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But generally speaking, unless you're a lateral hire, that seems like way too little cake for the hours you put in to get there (compared to a GS MD or a Wachtell partner that is).

It's not surprising that consultants make less than GS - that has always been the case. With respect to Wachtell you have to remember that Wachtell is a relatively small (very elite) boutique, while McKinsey is the world's largest strategy consultancy. Since they have so many more partners than Wachtell there is no way their average comp could compare with Wachtell - which pays 30-50% more on average than its competitors. If you take the top 200 McK partners they will bank the same as an average Wachtell partner...

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Officially the reason is that McKinsey wants its partners and directors to focus on their 'impact' on their clientsand so incentivise based on this.

The feeling in the firm is that linking remuneration too closely to the amount of work generated could result in clients paying for unnecessary projects and harm long-term relationships

I previously worked for McKinsey in London and have started a blog about consulting and how to get into it at www.theconsultingcoach.com

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I was more referring to how hellish going from being a consultant to partner is supposed to be. Apparently, the face-time, travel and butt-kissing are second to none. I doubt the average partner at Mckinsey is too far off the average one at Skadden too.

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I sometimes wonder why Mck vs PE.In both you'd see a variety of industries or specialize where you want. Get to guide a portfolio co's strategy, generate post-close value etc

But a Senior MD at a Mega Fund would bring in $15M vs 3M at McK... Do SMDs they really work 5x as hard? Add 5x as much value? Is the 80% paycut to work at McK worth it (assuming you could choose either one)?

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Difference is very simple. Most of a PE SMD's upside is in portfolio performance through carried interest. Therefore you are compensated based on how the fund does which equals risk.

McK guys, and bankers for that matter, are just consultants, they make recommendations and just that. There's no follow through risk, implementation risk, not to mention none of your capital is at risk.

Principal side vs. advisory side is always more lucrative, but also has more downside.

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Any private services company (consulting, boutique M&A, law, accounting) has a big interest in keeping compensation as quiet as possible. Even buyside shops don't regularly publish details. No one knew what MDs at banks made until they went public and were forced to disclose.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

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My friend's dad is a Director at McKinsey. If I were to guess I'd say he is pulling in at least 5MM/year. He's an incredibly nice guy and easy to chat with but he has a thing against helping out his son;s friends. Too bad, you can make it rain after leaving McK.

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Fact 1:Mr. Kumar is a senior partner McK that founded the Silicon Valley and India office

Fact 2:Mr. Kumar testified Monday that he gave "super confidential" information about McKinsey client AMD and other companies, to Mr. Rajaratnam in exchange for payments totaling $2 million that were made through offshore accounts to an account in his housekeeper's name.

His reaction to getting paid $1MM to pass illegal M&A tips to Galleon:"At the end of 2006, Mr. Kumar testified, Mr. Rajaratnam said he was so pleased with Mr. Kumar's work that he would pay him $1 million for the year.

When he heard that, Mr. Kumar said: "I almost fell off my chair." "

Conclusion:You are only impressed with $1M a year then your comp is not super high - won't get into risk/reward either.

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Fact 1:Mr. Kumar is a senior partner McK that founded the Silicon Valley and India office

Fact 2:Mr. Kumar testified Monday that he gave "super confidential" information about McKinsey client AMD and other companies, to Mr. Rajaratnam in exchange for payments totaling $2 million that were made through offshore accounts to an account in his housekeeper's name.

His reaction to getting paid $1MM to pass illegal M&A tips to Galleon:"At the end of 2006, Mr. Kumar testified, Mr. Rajaratnam said he was so pleased with Mr. Kumar's work that he would pay him $1 million for the year.

When he heard that, Mr. Kumar said: "I almost fell off my chair." "

Conclusion:You are only impressed with $1M a year then your comp is not super high - won't get into risk/reward either.

Impossible. Average partners at my firm clear 750 after 5-6 years of making partner. Whether or not you're making 3MM$ a year, if you get a 2MM$ check for doing 5 minutes of work, when you were only expecting $1MM, I think you would fall off your chair too.

-MBP

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Well I wasn't saying Kumar earned 750, just saying based on what he seemed to have earned (it didn't seem like 25 million a year), the average partner makes 750. Which seems to line up with your numbers, do you work at a MBB?

In contrast, a 2nd year VP (EM equivalent) probably earns that much at a large PE shop. 1st year associates earn 300+

manbearpig:

friendofblue:

I'd guess ~750 at most

Fact 1:Mr. Kumar is a senior partner McK that founded the Silicon Valley and India office

Fact 2:Mr. Kumar testified Monday that he gave "super confidential" information about McKinsey client AMD and other companies, to Mr. Rajaratnam in exchange for payments totaling $2 million that were made through offshore accounts to an account in his housekeeper's name.

His reaction to getting paid $1MM to pass illegal M&A tips to Galleon:"At the end of 2006, Mr. Kumar testified, Mr. Rajaratnam said he was so pleased with Mr. Kumar's work that he would pay him $1 million for the year.

When he heard that, Mr. Kumar said: "I almost fell off my chair." "

Conclusion:You are only impressed with $1M a year then your comp is not super high - won't get into risk/reward either.

Impossible. Average partners at my firm clear 750 after 5-6 years of making partner. Whether or not you're making 3MM$ a year, if you get a 2MM$ check for doing 5 minutes of work, when you were only expecting $1MM, I think you would fall off your chair too.

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Yeah it's definitely over 750. Manbearpig got it right, Kumar was astounded because a million bucks is a lot of money, even for someone that brings in 3mil a year. Think about it: if you're a junior person making 100K and someone handed you a check for 33K, that would seem like a lot, no? Just because you make a couple mil a year doesn't mean that a million dollars becomes chump change.

One of those lights, slightly brighter than the rest, will be my wingtip passing over.

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Yeah it's definitely over 750. Manbearpig got it right, Kumar was astounded because a million bucks is a lot of money, even for someone that brings in 3mil a year. Think about it: if you're a junior person making 100K and someone handed you a check for 33K, that would seem like a lot, no? Just because you make a couple mil a year doesn't mean that a million dollars becomes chump change.

Exactly.... I think the comment MBP responded to was someone who doesn't quite understand the value of money.... someone handing you a check for a million dollars unless you were making a many million dollars a year is a lot of money

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Yeah it's definitely over 750. Manbearpig got it right, Kumar was astounded because a million bucks is a lot of money, even for someone that brings in 3mil a year. Think about it: if you're a junior person making 100K and someone handed you a check for 33K, that would seem like a lot, no? Just because you make a couple mil a year doesn't mean that a million dollars becomes chump change.

Exactly.... I think the comment MBP responded to was someone who doesn't quite understand the value of money.... someone handing you a check for a million dollars unless you were making a many million dollars a year is a lot of money

Why rekindle a 7 month old thread...

If I had asked people what they wanted, they would have said faster horses - Henry Ford

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Yeah it's definitely over 750. Manbearpig got it right, Kumar was astounded because a million bucks is a lot of money, even for someone that brings in 3mil a year. Think about it: if you're a junior person making 100K and someone handed you a check for 33K, that would seem like a lot, no? Just because you make a couple mil a year doesn't mean that a million dollars becomes chump change.

Exactly.... I think the comment MBP responded to was someone who doesn't quite understand the value of money.... someone handing you a check for a million dollars unless you were making a many million dollars a year is a lot of money

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I'm very curious on what are the reasons for not paying based on how much business each partner bring in? Why can't a partner be paid more if he brings me much more revenue to the firm than other partners?

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xmasboy this is a question bigger than just consulting. It's a general incentive question that many, many organizations face. This topic is addressed in business schools, and the recent popular well reviewed business book 'The Org' also addresses it

Basically, there is no perfect incentive system.

Problems with incentives based only on revenue include:* You motivate partners to steal work from other partners* You don't motivate partners to provide knowledge or "expertise" to projects that aren't their own* You under motivate partners to do thought leadership that helps the firm e.g. publishing in Harvard Business Review or similar. Anything with a "positive externality" (google it) is under motivated.* You may make partners risk averse. It's hard to get a partner away from their tried-and-true client, but you may need their expertise to try to get that new, golden-egg client. Or, you may want someone to go help jump-start another region in a developing economy. This is good for the firm, but if they are rewarded only on revenue, and they know the first year or two in the new region would be low revenue, why would they go?

On the plus side, basing incentives purely on personal revenue is very high powered and motivating to increase your personal revenue.

Anything you do that addresses the bullets above (did they format as bullets?) weakens the power of the personal incentives, but, of course, it helps fix the issues described in the bullets. It's always a trade-off.

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